The making of a globally sustainable energy system

By Steve Pye, on 14 November 2016

Blog by Steve Pye, Paul Ekins, Ian Hamilton, November 2016

As delegates at COP22 in Marrakech convene to discuss how to implement the Paris Agreement, there is a continuing focus on how to move to a sustainable global energy system. The challenge is that fossil fuels have long been the mainstay of the energy system, and an essential driver of growth. Rapidly reducing our reliance on their use is no small task, but one that is essential if we are to succeed in achieving the climate ambition set out in the December 2015 Paris Agreement. The challenge is brought sharply into focus when we consider that the global energy system accounts for 65% of anthropogenic GHG emissions[1], but will need to be a net zero-emitter at some point between 2050 and 2100.

The challenge

The barriers to this transition are immense. At a time when the incoming administration of the USA is signalling complete disregard for climate change and a return to increasing use of domestic coal, when oil and gas exports underpin economic development and government budgets, as in Russia, and new producers are looking to economic opportunities that such energy commodities can bring, the prospects of a successful large-scale transition appear slim.

If countries (governments, citizens and business) could be convinced to shift away from fossil fuels, the good news is that we know how this could be done[2], while the benefits of doing so are becoming increasingly evident. Analysis using TIAM-UCL[3] shows the required decline in the use of fossil fuels globally under a 2 ⁰C climate objective, compared to the rise observed under a scenario that reaches a 4 ⁰C temperature rise by the end of this century (Figure 1).

Crucial to the transition is a rapid phase out of coal, primarily in its use for electricity generation and industrial sectors. Oil use, while not increasing rapidly despite major growth in transport demand, remains at close to current levels due to the longer time required to scale up lower carbon vehicles to replace the current stock. Gas, on the other hand, may have room to increase, due to its lower emissions and as an alternative to coal.

Crucially, the use of oil and gas at these levels in 2050 is only consistent with a 2 ⁰C carbon budget (the cumulative level of CO2 that can be emitted this century) because of the substantial deployment of carbon capture and storage (CCS) used both directly with coal and gas and also with bioenergy. CCS captures 85-90% of the CO2 from fossil fuel combustion, storing it underground in depleted oil and gas wells, or natural aquifers. Bioenergy use with CCS, often referred to as BECCS, is assumed to deliver ‘negative emissions’,[5] effectively allowing headroom for continued use of fossil fuels in those sectors where emission reductions are difficult or very expensive.

Benefits and opportunities

While the challenges of shifting away from fossil fuels are significant, the arguments for such a transition need to be framed around the considerable opportunities and benefits.

An enormous economic investment opportunity presents itself, due to the need for rapid scale-up of low carbon solutions. The IEA estimates that 40% of total energy sector investment, or $13.5 trillion in the period 2015-2030, will need to be invested in energy efficiency and low carbon technologies.[6] There are some promising signs that this investment shift is already underway with almost $330 billion invested in clean power generation technologies in 2015,[7] outstripping investment in fossil fuels. Key to further scaling investment in low carbon technologies will be increasing research, development and innovation to get technologies to commercial viability. Initiatives such as Mission Innovation[8] and the Breakthrough Energy Coalition[9], both launched at COP21, will be crucial in providing funding in this space.

From a political perspective, there is also the opportunity to diversify from the uncertainty and price volatility of fossil fuel markets, and reduce budget expenditure on fossil imports and subsidies. Another crucial opportunity is associated with health. A Lancet Commission report on climate change and health set out the multiple benefits for global health. [10] An important example cited was the impact of coal power plant phase out on improving air quality and reducing health impacts, in addition to the huge GHG reduction benefits. In China, while economic restructuring is an important driver in the recently observed reduction in coal consumption,[11] policy makers have also recognised the unsustainability of coal from a public health perspective, due to the resulting air pollution.[12]

Of course, the key question remains as to how the global energy transition will be effectively implemented. Critically, the Paris Agreement has established the principle that it will be countries who will implement the necessary mitigation actions according to their national circumstances and priorities, as recognised under the Intended Nationally Determined Contribution (INDC) ‘pledge and review’ approach. Our own analysis of the INDC pledges shows something on an ambition gap, estimating to lead to a 3.4 ⁰C rise in average global temperatures (relative to pre-industrial levels).[13] The pledges could even see coal at similar levels today in 2050. This represents something of a fundamental disjuncture between the political consensus to limit temperature rise and the current commitment to action.

Planning for the transition

Through the UNFCCC process, countries will be encouraged to see how they can ratchet up ambition, crucially to avoid the lock-in to higher carbon energy systems that is likely to arise from a short term perspective. This lack of longer term perspective could make climate objectives unachievable.

A higher level of ambition requires a multi-decadal outlook, both to guide near term decisions and set the long term direction of travel towards a low carbon system. An important initiative, the Deep Decarbonization Pathways Project (DDPP), has been underway since 2014. It seeks to promote the development of longer term deep decarbonisation pathways (DDPs) that are consistent with a 2 ⁰C temperature ambition.[14] Crucially, it recognises national priorities, takes account of different energy resources available, and the structure of the economy, and appreciates the levels of development in each country.

Figure 2. Divergence of national circumstances, and longer term convergence under deep decarbonisation transitions, based on CO2 per capita across DDPP countries (Source: DDPP, 2015[15])

The research has shown that the 16 highest emitting countries could transition to energy systems broadly consistent with the 2 ⁰C objective, with average per capita emissions falling to 2.1 tCO2 (Figure 2), and carbon intensity of GDP reducing by 87%. It demonstrated that national development priorities need not be in conflict with decarbonisation, but were rather strongly synergistic.[16]

For real progress to be made under the Paris Agreement, bridging the gap between the stated global ambition and that of the national strategies will be essential, and will require an understanding of the longer term, more ambitious transitions. Only by doing so can countries assess the near term efforts necessary to meet the longer term objectives in 2050 and beyond, and, fundamentally, the rates of transition. An important initiative to facilitate the longer term perspective will be launched at Marrakech (COP22) this week, known as the 2050 Pathways Platform. This will aim to build momentum across countries, businesses and other stakeholders, to build efforts needed for Article 4.19 of the Paris Agreement.[17]

Success will also require developed countries to lead on ambition, and help support capacity building and financing for other developing countries. And, to support the country-led approach, international cooperation on financing, technology innovation, and joint initiatives to tackle emissions e.g. emissions trading, sectoral agreements etc. will also be crucial.

[5] Sustainable bioenergy used for energy is broadly seen as a net zero emission fuel, as the CO2 emitted when combusted was extracted from the atmosphere during the growth. If this CO2 is now captured and stored, this can be considered to deliver negative emissions, effectively removing the CO2 permanently from the atmosphere.

Paul, many thanks to you and colleagues for your analysis. What you say is right. We have a mountain to climb to get to grips with the challenges of climate change. And the political wind is blowing in the wrong direction. What is missing, and has been for a while now, is lack of sufficient political and prioritisation. Climate change is never going to get the attention it deserves until developed countries see climate catastrophe staring them in the face. Important though creating decarbonisation pathways are, they risk remaining bounded in the academic world. Fossil fuel dependent businesses are not going to change their models just because we have created decarbonisation pathways. They have too much to lose, too much in the way of potentially stranded investment stretching decades into the future. We are entering a stage of the world where we are steaming past 2 deg C and into more dangerous climate impact territory. In parallel, we are seeing rising populations, growing inequality and social upheaval, more pressure on natural resources, political uncertainty and wobbles in the whole model of continuing economic growth. Which brings me to the work which started at Surrey University this year at the newly formed Centre for the Understanding of Sustainable Prosperity (CUSP), led by Tim Jackson. I assume you and colleagues are familiar with this ESRC funded initiative. The climate challenge and the decarbonisation of fossil fuel dependent economies is a major challenge facing us. But it is not the only one. Revisiting Limits to Growth with the added climate perturbation leads to a consideration of our economic dependency on growth and the globalisation model as the means whereby multi-nationals deliver growth to populations in developed countries. As a working hypothesis one can ask whether the way we do business today is compatible with tackling climate change in a meaningful manner which stands a chance of avoiding the worst impacts not just in developed countries but, more importantly, in developing countries more exposed to those impacts. CUSP is addressing some of the issues and I wondered whether this something you are now looking at under the auspices of your Institute?

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